If you file for bankruptcy in Kentucky, the motor vehicle exemption protects $2,500 in equity in a car, and double that if you are married filing jointly.

If
you file for bankruptcy in Kentucky, the Kentucky motor vehicle
exemption allows you to protect $2,500 in equity in a carhelps determine
whether you can keep your car, truck, van, or other vehicle if you file
for Chapter 7 bankruptcy. Here you’ll find information about the
Kentucky car exemption: how much it is, what types of vehicles it
covers, how it works for married couples, how to find the applicable
statute, and more.

The Kentucky Motor Vehicle Exemption and Your Car

Kentucky’s motor vehicle exemption plays a large role in determining
whether or not the bankruptcy trustee can take your vehicle to repay
your unsecured creditors. If the equity in your car is less than
Kentucky’s car exemption, then the trustee cannot sell it. If the equity
in your car is significantly more than the applicable exemption amount,
the trustee is likely to sell your car to repay your unsecured
creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?

The Amount of Kentucky’s Motor Vehicle Exemption

In Kentucky, you can exempt up to $2,500 of equity in your car or other vehicle.

Example. Kelly owns a 2009 Toyota Corolla worth
$11,000. She owes the dealer $9,000 on the loan, so there is $2,000 of
equity in her car. Kelly can use the Kentucky motor vehicle exemption to
fully protect her car if she files a Chapter 7 bankruptcy.

The Federal Motor Vehicle Exemption

Kentucky allows you to choose between the state exemptions or the federal bankruptcy exemptions. The federal motor vehicle exemption
amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions.

Using Kentucky’s Wildcard Exemption to Protect Your Car

If the equity in your car is more than $2,500, you may be able to
protect the extra equity using a wildcard exemption. The Kentucky
wildcard exemption allows you to protect up to $1,000 of equity in any
property, including your vehicle. (To learn more,
see The
Kentucky Wildcard Exemption.)

Example. Kelly’s 2009 Toyota Corolla is worth
$11,000, and she owes the dealer $7,500 on the loan. There is $3,500 of
equity in her car. Kelly can combine the motor vehicle and the wildcard
exemptions to protect all of the equity in her car in a Chapter 7
bankruptcy.

Can Married Couples Double Kentucky’s Motor Vehicle Exemption?

Some states allow married couples filing a joint bankruptcy petition
to double the listed exemption amounts. Married couples filing
bankruptcy in Kentucky can double their motor vehicle exemption to
protect a total of $5,000 of vehicle equity.

What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?

The Kentucky exemption allows you to protect one motor vehicle, such
as a car, truck, or van, and any necessary accessories, including one
spare tire.

Kentucky’s Tools of the Trade Vehicle Exemption

If you are a mechanic or a person who services mechanical or
electrical equipment, or an attorney, minister, physician, surgeon,
chiropractor, veterinarian, or dentist, you can protect up to $2,500 of
equity in one motor vehicle and accessories, including one spare tire.